Tags: Obama | Sachs | budget | sequester

Economist Jeffrey Sachs: Obama Planned Big Budget Cuts all Along

By Dan Weil   |   Thursday, 28 Feb 2013 07:58 AM

While President Barack Obama is warning that the automatic spending cuts will cause a disaster, large spending reductions are exactly what he had in mind from the beginning, says Jeffrey Sachs, director of The Earth Institute at Columbia University.

“Many of the pending cuts are indeed ill-advised, but the surprising truth is that from the start of his presidency, Mr. Obama has planned a steep decrease in discretionary spending as a share of national income,” Sachs writes in the Financial Times.

“Each year he has put a budget on the table. Each year that budget has called for a sharp decline in discretionary spending as a share of gross domestic product in 2012 and later years.”

Editor's Note:
Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

But what about Obama’s rhetoric about increasing public investments in America’s future?

“[That] has always been contrary to the budgets he has presented, though most of his supporters have been unaware of this contradiction,” Sachs says.

While Republicans are mostly being blamed for the sequester, spending levels for fiscal 2013 under the sequester will about equal Obama’s request in his draft budget of mid-2012, he notes.

The explanation is that Obama decided to support making the Bush tax cuts permanent for everyone but the wealthy and had to find a way to pay for them, Sachs writes.

“Mr. Obama probably hoped that when the moment of truth arrived, when the spending cuts started to bite, the American people would support higher taxes rather than the spending cuts long called for in his own budget proposals. And perhaps they will still do so,” Sachs writes. “Yet he has never presented an alternative with more robust tax revenues in order to fund a higher sustained level of public investments and services.

“After years of deflecting public attention from the coming budget squeeze, he will now preside over sharp cuts in public services and investments that are the opposite of his stated goals.”

Economists on both sides of the political aisle object to the sequester. “This is a bad idea whose time has come,” Douglas Holtz-Eakin, an economist who served in the George W. Bush administration, tells USA Today.

Erskine Bowles, former co-chairman of Obama’s debt reduction commission and an aide to Bill Clinton, told the paper, “I think it’s really going to irritate a lot of people. You wait until these people have to wait three hours to get through security at the airports.”

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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